Ameriprise Financial Reports Second Quarter 2020 Results
|Earnings Per Diluted Share||Return on Equity, ex. AOCI (1)|
|Q2 2020||Q2 2020|
|Adjusted Operating||$2.64||Adjusted Operating||35.6%|
“Ameriprise delivered another good quarter with strong underlying business results in the face of substantial headwinds from low interest rates and a difficult operating environment due to the pandemic. The powerful combination of our client experience, diversified business and financial strength continues to differentiate Ameriprise.
“In Wealth Management, investors are increasingly seeking tailored financial advice, excellent service and a seamless online experience, which is leading to strong client flows. And in Asset Management, trends continued to improve nicely, driven by our results in the U.S. We delivered positive net flows in the quarter that reflect our active management expertise and deep understanding of the needs of our distribution partners.
“Our business generates strong free cash flow through market cycles that we reinvest in the business and return to shareholders. In addition to our dividend increase earlier this year, we restarted our share repurchases during the quarter. Our financial strength and liquidity position us well to navigate ongoing volatility and economic uncertainty.”
- Second quarter adjusted operating earnings per diluted share was $2.64 and was negatively impacted by $1.14 per diluted share from the reversal of a tax benefit in the first quarter and $0.76 per diluted share from the Federal Reserve rate cuts in March. Excluding these items, EPS growth would have been in the low teens reflecting strong underlying business performance in a difficult environment.
- In the quarter, GAAP net income was negatively impacted by changes in the company’s credit spread and the valuation of derivatives used to hedge the company’s variable annuity living benefit guarantees(2). Year-to-date, GAAP net income per diluted share was $11.77.
- The company generated strong organic growth in the quarter with nearly $5 billion in wrap net inflows in Wealth Management and more than $2 billion of net inflows in Asset Management.
- Adjusted operating net revenue was $2.8 billion, a 6 percent(3) decline. In the quarter, strong organic growth was negated by lower interest rates and 3 percent lower average equity markets.
- Pretax adjusted operating margin remained strong at 21 percent, as lower revenue was partially offset by well managed expenses. General and administrative expenses declined by 2 percent while still investing for business growth.
- Excess capital was $1.9 billion and free cash flow generation was approximately 100 percent of adjusted operating earnings year-to-date, demonstrating the company’s continued strong balance sheet fundamentals. The company returned $382 million to shareholders in the quarter, with 1.7 million shares repurchased.
- The company continued to benefit from its strong technology infrastructure with approximately 95 percent of employees continuing to work from home during the pandemic. During this period, the company has maintained strong engagement with clients, advisors and sales teams and delivered an excellent service experience.
(1) Return on equity excluding AOCI is calculated on a trailing 12-month basis.
(2) See page 8 for reconciliation.
(3) Excludes Auto & Home.